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Renting vs Buying in Grand Rapids Michigan | Summer 2015 Update

You think you’re having a tough time looking for a place to buy in this market? Try renting one! Grand Rapids is currently at nearly 100% rental occupancy, the lowest rental vacancy rate in the US. Home prices have been back to pre-crash levels for about a year now, and the market is increasingly competitive if you are looking to purchase. No surprises here!

So, what’s the best route to go? You’re putting all of this effort in…should you rent or buy? Lets take a look at typical scenario in a great rental area, Eastown, a popular Grand Rapids neighborhood near downtown, where there is a high demand and quantity of both rentals and purchases.

The Eastown Comparison:

52 homes recently sold
(What’s currently for sale in Eastown? Glad you asked.)
Average sale price: $131,780
Average #BRs: 3.5
Avg SQFT: 1743

Average Rent for a 3-4 BR 1750 sqft home in Eastown: $1400/month.

Here’s how it looks, running this scenario through the Realtor.com calculator:

eastown-rent-v-own

The Upgrade

Looks like buying in Eastown quickly pays for itself, comparing $1400/month rent to a purchase of a $132,000 home. But what if you’re already leasing a home in that price range, but you’re ready for an upgrade and/or increased square footage. You want a home with a nice bit of land, an entry-level home in East Grand Rapids, maybe a distinctive spot in East Hills, or something in an historic district. Your lender says you can afford a $230,000 purchase price. Here’s how that looks:

erg-or-hh

Try out your own scenairo! Here’s a tool from Realtor.com:

Rent Vs Own Calculator Link

Grand Rapids Association of Realtors (GRAR) Joins SWMRIC

MLIVE ARTICLE

From GRAR

The Grand Rapids Association of Realtors, or GRAR,  is now part of the South and West Michigan Regional Information Center, or SWMRIC.

The biggest change will involve the MLS, the Multiple Listing System, which is how all the homes currently on the market can be viewed by Realtors, Clients and the general public. GRAR was using Solid Earth for their MLS, but to join with SWMRIC, converted over to that system, using Rapattoni instead. And while for the most part, all the listings transferred over, there are still a few gliches being worked on. In addition, the number of characters for property descriptions is also limited to 1000, so many Realtors will need to downsize their comments.

SWMRIC covers available Real Estate in the South and West Michigan counties of Allegan, Barry, Berrien, Branch, Calhoun, Cass, Hillsdale, Ionia, Kalamazoo, Kent, Lake, Manistee, Mason, Mecosta, Montcalm, Muskegon, Newaygo, Oceana, Osceola, Ottawa, St. Joseph, Van Buren and beyond.

Serving the following Realtor Associations: Battle Creek Area, Branch County, Grand Rapids, Greater Kalamazoo, Hillsdale County, Mason-Oceana-Manistee, Montcalm County, Southwestern Michigan, St. Joseph, West Central Michigan and West Michigan Lakeshore.

Homebuyer Tax Credit Extended for Those With Accepted Offers in Place

On the evening of June 30, Congress passed an extension of the closing deadline for the Homebuyer Tax Credit. The extension applies only to transactions that have ratified contracts in place as of April 30, 2010, that have not yet closed; the new closing deadline for eligible transactions is now September 30, 2010.

Finding Grand Rapids MI Foreclosures

206 Foreclosure Listings are Currently listed in Grand Rapids. Many aren’t listed on the MLS.

Grand Rapids foreclosures 6/30/10

For an up to date list of all current Grand Rapids MI foreclosures in your price range and area, please email invest@grar.com.
Here are some quick links as well:

HUD Homes
Fannie Mae
Freddie Mac
OCWEN
Fifth Third Bank

Click the “Foreclosures” tab for more info.

Negative Impact of New Appraisal Rules

Negative Impact of New Appraisal Rules

-by Pete Bruinsma, GRI

Here are two examples I’ve encountered in the past six months in which the new HVCC/FHA appraisal rules have negatively affected sales. First, a quick opinion.

The new rules for conducting appraisals are a great example of how a well-intentioned idea can be placed into practice prematurely. I know not one Realtor, lender or appraiser who is thrilled with these new rules. Quality of my appraisals have been lower, prices higher, appraisers are paid less as a result, and authority and liability have been misappropriated.

In many regions, homes are worth less now than they were worth three years ago. Some home value inflation and some demand was manufactured through fraud, committed through improper lending and appraisal practices. Although this undisputed truth was witnessed by most Realtors, lenders and appraisers, the “fraud” word is easier to finger than the abundance of  misjudgments made by lenders, consumers and economists over the course of many years. I feel as though the new method of operation for appraisals is an overcompensation.

Two (out of many more) things that bug me about this:

The advent of the “Re-appraisal” – Appraisers I know recently billed $300-350 per appraisal and retained much of that. Under new rules they share the fees with management companies, costs are driven down through competition, and they now retain 50-60% of the former fees with the purchaser paying the same or more. Plus, appraisals are under hightened scrutiny, so less money for tougher work. Since appraisers are not allowed to have any contact with referring lenders under the new rules, and findings are largely unchallenged, items never before noted on an appraisal such as “peeling paint” are new cause for a note on the appraisal, and a the call for a re-inspection with an additional fee. This easy pay correction for the appraiser is just passed down to the buyer.

Discouragement of Localism – Lets face it, without connections in the business with good lenders, surveyors, lawyers, title companies, sign companies, builders, contractors, government officials, neighborhood associations and more, the job of a good Realtor would be a lot less streamlined, and the end product to clients would be less valuable. Taking the fair, reliable, knowledgeable, local appraisers we’ve worked with for years out of the running for our new business has many negative implications and should be reevaluated. Plus, appraisers randomly assigned to find comps in neighborhoods with which they are unfamiliar simply results in bad appraisals.

Here are my two examples from personal experience:

Example 1: I’m representing the buyer. Short sale finally approved after 5 months! One month deadline to get it closed, Bank of America requires 4 days to examine the HUD statement prior to close. Appraisal ends up taking three weeks and costs $650.

The chain of command explains a lot of the problem: Short sale negotiator -> Realtor -> Loan Officer -> Bank -> Appraisal Management Company -> Appraiser (via fax).  The initial appraisal request took 5 days to reach the appraiser and three more to fit into his schedule. Once there, he noted some loose shingles and peeling paint, subject to repair and a $125 re-inspection fee. Repairs were made, re-inspection request submitted, 5 days for the request to reach the appraiser and two more to fit into his schedule. Appraiser comes back, repairs are satisfactory, but he notices one piece of rotten wood underneath the shingle repair, where water had been leaking. This is on a porch overhang. He notes it on the appraisal, subject to repair and a $125 re-inspection fee. He also calls for the water to be turned on again even though we’d submitted our plumbing inspection from a certifed plumbing inspector, along with a letter that stated the water was on at time of inspection.

We did make it happen, the deal did close in time, but it came down to the final day. The loan officer voluntarily paid for the two re-inspection fees. The buyers and sellers ended up emotionally exhausted but happy.

Example 2: Rehab project purchased for $17,000. Pre-construction appraisal estimated current value of $17,500 with final estimated finished value of $68,500. Finished appraisal comes in at $20,000.

Home had been sold two years prior in less-than-perfect condition for $85,000. Home was fully rehabbed by licensed contractors including new mechanicals, roof, insulation, foundation and drainage work, new hardwood floors, landscaping, paint, bathroom, etc. Tenants placed for $750/month. Home appraised for a refinance, $450 charged. Appraisal came in at $20,000 with four comps, all short sales and foreclosures in poor condition. I personally found two 3-month-old non-foreclosure sold comps and one pending sale, of similar construction, age and size within 1/2 mile that supported $60-70k. These were submitted to the bank and denied.

Now, does the owner gamble another $450 by going through another bank, not knowing who is going to appraise the home? Maybe. Does the owner realize a benefit in lowered taxes from the city assessor taking this $20,000 appraisal into consideration when determining taxable value?  Nope.

Frustrating.

Fannie Mae makes Short Sales Easier

Fannie Mae Introduces HAFA Program


On Tuesday, June 1, Fannie Mae issued Servicing Guide Announcement SVC-2010-07, introducing Fannie Mae’s Home Affordable Foreclosure Alternatives (HAFA) Program. It, like Treasury’s Home Affordable Foreclosure Alternatives Program (as described in Supplemental Directive 09-09 Revised), is designed to mitigate the impact of foreclosures on borrowers who are eligible for a loan modification under the Home Affordable Modification Program (HAMP) but ultimately are unsuccessful in obtaining one.

Program Features
The Fannie Mae Home Affordable Foreclosure Alternatives Program, which becomes effective August 1, 2010, simplifies and streamlines the use of short or “preforeclosure” sale and deed-in-lieu of foreclosure (DIL) options on HAMP-eligible loans by incorporating the following unique features:

  • Complements HAMP by providing alternatives for borrowers who are HAMP eligible (including borrowers facing imminent default);
  • Allows the borrower to receive pre-approved short sale terms prior to the property listing;
  • Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement;
  • Releases the successful HAFA borrower from future liability for the debt;
  • Uses standard processes, documents, and timeframes;
  • Provides financial incentives to borrowers, servicers and subordinate lienholders; and
  • Utilizes verified borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.

For More Information
For complete program information, read the Announcement. Other related materials are available on the new HAFA page on eFannieMae.com.

Go Grand Rapids! CNN Article

Link
Full Article.

Excerpt:
(Fortune) — It is not the kind of view you expect these days in downtrodden Michigan. From this rooftop plaza on the 17th floor of Bridgewater Place, evidence of urban renewal spreads in every direction. Directly to the south is the modern campus of Grand Valley State University, home to 11,000 students. Across the Grand River lies the sprawl of the redeveloped entertainment district, with its new arena and convention center, steps away from downtown business and government office buildings. Atop a hill to the east is the city’s crown jewel: a $1 billion (and growing) medical complex that includes a cancer research center, specialized treatment facilities, and a medical school.

This is Grand Rapids, a small city (pop. 200,000) in western Michigan with a redevelopment plan that has lessons for other cities looking to engineer new growth after the decline of old-economy industries. That this plan has taken hold in, of all places, the Rustbelt of Michigan makes it all the more remarkable. Two decades ago the city could have been headed the way of Flint, Pontiac, and, yes, Detroit. But instead its fortunes have steadily improved, thanks to a remarkable combination of business leadership, public-private cooperation, and the deep pockets of local philanthropists.

Grand Rapids is much smaller than that city on Michigan’s eastern coast, Detroit (pop. 800,000). Its populace is a bit more diverse, its suburban leaders were willing to work with city government, and its issues were much less complex. But at a moment when corporate, philanthropic, and political leaders in Detroit are just beginning the process of working together to help revive the city (see “Downsizing Detroit” on time.com), the Grand Rapids reinvention is worth examining. For years Detroiters were promised that one master project after another would solve their woes. None did. But in Grand Rapids, business leaders painstakingly set goals, aligned with government officials, generated support, and empowered key players. “Every community has a culture, and you have to pick out what works in your own town,” says Birgit Klohs, the energetic head of Right Place, a local economic development group. “You have to figure out who the leaders are, get them onto a team, create the vision, and get everybody headed in the same direction.”

more at bit.ly/gogr

I-196 Construction Video